The endoplasmic reticulum (ER) is the major site of protein biosynthesis in eukaryotes. Polypeptides entering the ER may occasionally adopt aberrant conformations, resulting in aggregation-prone, misfolded proteins. The accumulation of misfolded proteins represents a form of ER stress, which has been implicated in the pathogenesis of many human diseases. To preserve ER homeostasis, eukaryotes have evolved a conserved quality control pathway termed retro-translocation or dislocation, which efficiently eliminates unwanted proteins from the ER by exporting them into the cytosol. Polypeptides undergoing retro-translocation are disposed of by the cytosolic proteasome. The retro-translocation pathway is hijacked by certain viruses to destroy folded cellular proteins required for immune response, allowing the virus to evade host immune surveillance. The molecular mechanism of retro-translocation is largely unknown. For example, it is not well understood how cells can distinguish misfolded polypeptides from those that are in the folding process. How misfolded substrates are selectively targeted to the translocation site at the ER membrane, and subsequently transferred across the membrane are completely unknown. The identity of the protein-conducting channel for retro-translocation is still under debate. In addition, how viruses can exploit this cellular pathway during their invasion into the host cell is unclear. We have identified a cytosolic enzyme called p97, which provides the major driving force to move substrates into the cytosol during retro-translocation. Two co-factors of p97, Ufd1 and Npl4, are also required. The ATPase complex interacts in its ATP bound state with substrates emerging from the ER membrane, and the two ATPase domains appear to alternate in ATP hydrolysis to release polypeptides from the ER membrane once they are modified by poly-ubiquitination. Interestingly, we found that the ATPase complex contains several ubiquitin binding domains that specifically recognize ubiquitin chains. This partially explains why the ATPase complex preferentially acts on poly-ubiquitinated substrates. The interaction between the ubiquitin chains and p97 may trigger ATP hydrolysis by the ATPase, allowing it to ?pull? substrates out of the ER membrane. To understand how p97 functions at the ER membrane, we used an affinity purification approach to identify two novel ER membrane proteins, Derlin-1 and VIMP, which associate with p97. VIMP functions as a receptor to recruit p97 to the ER membrane. The conserved multi-spanning membrane protein Derlin-1 plays a central role in retro-translocation, perhaps as a component of the protein-conducting channel. It receives substrates from the ER lumen, and also associates on the cytosolic side of the ER membrane with both the ubiquitination machinery and the "pulling" ATPase p97. Thus, it provides a link between substrate recognition in the ER lumen and polypeptide dislocation in the cytosol.